AES Brasil Seeks to Start Shuttered Plant With Petrobras

Brazilian and Argentine government officials are
negotiating the deal to secure gas for the Uruguaiana plant
after YPF suspended shipments of the fuel in 2008, Chief
Executive Officer Britaldo Soares said in an interview today in
Barueri, Brazil. The shuttered plant costs as much as $7 million
a year to maintain, he said.

AES Brasil is seeking compensation from YPF at the
International Chamber of Commerce arbitration tribunal for the
suspension of the shipments, which occurred when the Argentine
company was controlled by Spain’s Repsol SA. (REP) Supply was cut as
Argentina faced gas rationing to fight shortages of the fuel. A
ruling probably will be made by year-end, Soares said.

“There is a Brazilian interest to have Uruguaiana back,”
Soares said. “It’s 640 megawatts not working today -- that’s 10
percent of what the country needs” to add annually in
generating capacity to meet demand, he said.

Petrobras could supply the gas from fields in Argentina or
by buying liquefied natural gas and processing it at an
Argentine plant before sending it to Urugaiana, Soares said.

Preparing Restart

AES is making some investments now to prepare the plant to
resume output of about 170 megawatts as soon as January, and it
may reach full capacity in March, Soares said.

The press office from Brazil’s Energy Ministry couldn’t
immediately comment, an official said by phone. Jessica Rey, a
spokeswoman for the head of the Argentina Energy Commission,
declined to comment. Petrobras Argentina’s press office in
Buenos Aires didn’t respond to e-mailed requests for comment.

Petrobras Argentina gained 1 percent to 2.92 pesos at 2:11
p.m. in Buenos Aires today after sliding as much as 0.7 percent.

A deal to restart Uruguaiana would occur as AES tries to
make its Brazilian operations more efficient amid tighter
government control on the electricity industry as President
Dilma Rousseff seeks to drive down power prices, Soares said.

AES’s Brazilian distribution unit, Eletropaulo
Metropolitana Eletricidade de Sao Paulo SA, is seeking to sell
250 million reais worth of real estate, he said. Eletropaulo
will reach an accord “soon” for about two-thirds of that
amount, Gustavo Pimenta, vice president of services, said today
at the same interview at the company’s headquarters.

Eletropaulo’s shares have dropped 63 percent this year,
making it the fourth-worst performer in the 818-member MSCI
Emerging Markets index, after Brazil’s power regulator Aneel in
July said the company needs to reduce rates by 9.3 percent.

The distributor has appealed Aneel’s decision, arguing the
regulator didn’t take into consideration 500 million reais in
investments made between 2007 and 2011, Soares said.